Typhoon Jebi, which pounded Japan last week, is the largest cat loss of 2018 to date with early unofficial estimates of an insured loss of $5bn-$6bn.
As a consequence, the typhoon – which made landfall last week as a cat 3 measured by windscale – will hit the lower layers of the cat excess of loss treaties bought by the Japanese “big three” insurers MS&AD, Tokio Marine and Sompo Japan Nipponkoa.
The received wisdom is that cat losses tend to attach lower layers at around $1bn for the country’s big-three insurers, which dominate the Japanese market.
However, broking sources said that it was less clear whether the XoL programs of the Japanese Kyosai mutuals would be affected. So-called Super Typhoon Jebi – described as Japan’s most powerful storm in 25 years – was the fifth typhoon to impact the country so far in 2018.
Infrastructure was badly affected by the typhoon. At Kansai International Airport, which serves the greater Osaka region, runway aprons, planes and terminal buildings were flooded by storm surge.
Adding to the problems at the airport, a tanker that had been anchored in Osaka Bay drifted out and caused significant damage to a two-mile long bridge which acts as the sole connection from the airport to the city of Izumisano.
Around 800 domestic and international flights have so far been cancelled, affecting nearly 60,000 people.
According to RMS, some of the biggest losses could result from the damage to Kobe and Osaka ports and “marine cargo damage could be substantial”.
One senior reinsurance CEO told Re-Insurance that he expects typhoon Jebi to be a “significant reinsurance loss”.
“It is too early for loss estimates but we expect them in due course,” he said.
Japanese renewals typically take place in April each year.
The 2018 1.4 renewals for Japan’s six largest reinsurance contracts came in largely flat with international markets reluctant to countenance further cuts in the wake of a relatively stronger 1.1 this year. But reinsurers on the programmes look set to be stung by losses from Typhoon Jebi.
Preliminary data from Japan’s Fire and Disaster Management Agency cited more than 1,100 homes damaged or destroyed, though this total was expected to increase significantly as assessments remained ongoing.
Early estimates by Aon on Friday pegged economic and insured losses in the hundreds of millions of US dollars, but the broker warned that figure had the potential to rise significantly.
Typhoon Jebi was the latest in a flurry of catastrophe events to hit Japan this year which may also impact aggregate protections and pro rata treaties.
So far in 2018, the country has been hit by five separate typhoons in addition to Jebi, as well as an earthquake which rocked a region in the north of the country on Wednesday.
Typhoons in June and July resulted in Japan’s deadliest flood since 1982 and the country’s deadliest natural catastrophe since the 2011 Tohoku earthquake.
AIR pegged losses stemming from flooding to at between $2.6bn and $4bn, with Japanese carriers on the hook for a large proportion of those losses.
The modelling agency said its estimates were based on damage to property – both residential and commercial – as well as automobiles and contents on individual properties.
However, the estimates do not include damage from landslides, losses to land or infrastructure, business interruption costs, loss adjustment expenses or demand surge for the cost of materials or labour in the wake of a catastrophic event.
In the months that followed, MS&AD warned that it expected gross losses of around 66bn yen ($594.8mn) from the flood. Rival carrier Tokio Marine Holdings said it expected to pay out 50bn yen ($451.8mn) for losses stemming from heavy rain in its Japanese heartland.
According to Aon, flood cover in Japan tends to be bundled with homeowner or commercial property insurance policies.
Car manufacturers Toyota, Mazda and Mitsubishi all halted production in a number of plants around the country following the storms in June and July.
Meanwhile, electronics firm Panasonic had to shutter operations after one of its factories was flooded causing a power cut. Brewing company Asahi also closed one of its factories.
On Thursday, a major magnitude-6.6 earthquake struck the Japanese island of Hokkaido in the early morning, with widespread structural and infrastructural damage across the island.
In the immediate wake of the earthquake, Impact Forecasting said it expects total economic losses to “minimally reach into the hundreds of millions of US dollars – if not highe